Features of the Uruguayan Car Market. Part 2: Taxes, Duties, and Initiatives

Taxes, duties and expenses when buying a car

The high cost of cars in Uruguay is largely due to the tax burden. When buying a new car, the following basic taxes and duties are levied:

• Import duty: 23% of a vehicle’s customs value. It applies to vehicles imported from outside trade agreements. Exceptions include cars from MERCOSUR countries (Brazil and Argentina) and Mexico, which are exempt under free-trade agreements. • IMESI (Impuesto Específico Interno): a specific internal tax, comparable to an excise duty on cars. This is the principal tax that significantly increases a car’s price.

The IMESI rate varies by engine size and fuel: • petrol cars up to 1,000 cm³: 23% of the value; • 1,001–1,500 cm³: 28.75%; • 1,501–2,000 cm³: 34.5%; • over 2,000 cm³: 46%; • diesel cars of any engine size: 115%.

Thus, for a 1.6-litre petrol sedan, the buyer pays roughly 30% extra in IMESI, while a comparable diesel car attracts more than 100%. The highest diesel rate reflects state policy: the 115% tax discourages private purchases of diesel passenger cars because diesel fuel is subsidised for commercial vehicles. As a result, the vast majority of cars sold in Uruguay run on petrol.

• Value added tax (IVA) – 22%, charged on the final price of the car (including IMESI) clasiautos.uy .
• Consular fee – 5%, a special levy on imported goods (including cars).
• Other charges include customs clearance, logistics, and the dealer’s margin. They can add another 5–15% to the final price. For example, importers factor in shipping, cargo insurance, broker services, and their profit.

Taken together, these taxes make cars in Uruguay among the most expensive in the region. For example, a small gasoline car (~1 L) is taxed at roughly 50% of its base price, and a diesel car at up to 150% of its base price. This is confirmed by the fact that Uruguayan prices are significantly higher than in neighboring countries: according to Numbeo, the level of car prices in Montevideo is 30-50% higher than in Buenos Aires or Sao Paulo. reddit.com .

Annual taxes and mandatory expenses.

After purchase, the owner also faces regular costs. The main one is the annual vehicle tax (patente de rodados), levied by the department and usually based on the vehicle’s value and age. For new cars it is high—up to 4–5% of the price a year—and gradually falls as the car ages. Many municipalities offer a 50% patente discount for electric vehicles. Owners must also purchase annual compulsory liability insurance, comparable to third-party motor insurance; its cost is set by the state insurance bank (BSE) and depends on the vehicle type. For a passenger car, it is about USD 100–150 per year. Without it, the vehicle cannot pass inspection or be driven.

Use of cars: fuel, inspection and driving license

Fuel costs. Petrol prices in Uruguay are among the continent’s highest. At the end of 2025, a litre of Super 95 petrol cost about UYU 78.2 (about USD 2), with IMESI accounting for roughly 40% of that price. In neighbouring Argentina or Brazil, a litre cost about USD 1–1.20. Filling a 40-litre tank in Uruguay therefore costs about USD 80, a substantial expense for car owners. Diesel is cheaper because it is not subject to IMESI—about UYU 48 per litre (roughly USD 1.20)—but private passenger diesel cars are rarely used because of the high purchase tax. High petrol prices encourage interest in fuel-efficient and electric vehicles.

Technical inspection (ITV). Uruguay is gradually introducing mandatory vehicle roadworthiness inspections. In the capital, Montevideo already requires all cars over five years old to undergo regular inspection talleractual.com . The procedure was introduced to improve safety and environmental performance: brakes, steering, lights, tyres, exhaust emissions, and more are checked. Inspection frequency depends on the vehicle’s age:

• Vehicles under three years old are exempt from inspection.
• Vehicles from three to 15 years old are checked every three years.
• Vehicles from 15 to 25 years old are checked every two years.
• Vehicles over 25 years old are checked annually.

So far, these rules are strictly mandatory only in Montevideo, but the National Road Traffic Safety Service (UNASEV) is pushing for ITV to be extended nationwide. talleractual.com . However, compliance remains incomplete: according to the cited data, only about 10% of vehicles in Montevideo had passed the mandatory inspection, illustrating enforcement difficulties. talleractual.com . However, when selling a used car, the notary usually requires an up-to-date inspection report or mechanical inspection to make sure the car is in good condition. oliveraautomotores.com .

Driving licence. Uruguay’s national driving licence (Licencia de Conducir) is issued by municipalities but is valid throughout the country (Permiso Único Nacional). A standard category B licence for a passenger car is issued for ten years to drivers under 55 gub.uy . After age 55, the validity period is gradually reduced: at 56 it is nine years, at 57 eight years, from 60 to 65 a maximum of five years, and from 70 it is renewed for only one year. gub.uy gub.uy . To renew it, a medical examination is required, including checks of vision, reaction time, and general health. The renewal procedure is straightforward: apply a month before expiry and provide an identity document, the previous driving licence, and a medical certificate. gub.uy gub.uy . If the licence has been expired for more than 2 years, you may need to take the practical exam again. gub.uy . Foreigners with a valid foreign driving licence may drive in Uruguay for up to one year, after which they must obtain a local licence through an examination or exchange, depending on agreements with the issuing country.

Traffic rules in Uruguay are generally similar to those in Europe: traffic keeps to the right; urban speed limits are 45–75 km/h and highway limits 90–110 km/h. Seat belts and motorcycle helmets are compulsory, and there is zero tolerance for alcohol while driving (0‰). Speed cameras and breathalysers are common, and fines are high—for example, exceeding the limit by more than 20 km/h can result in a fine of about USD 200. Operating a car therefore involves substantial costs and strict requirements, but provides considerable mobility in a relatively small country.

Government programs and environmental initiatives

The Uruguayan government actively supports green mobility and fleet renewal through both tax incentives for environmentally friendly vehicles and direct subsidies and incentive programmes.

Tax incentives for electric vehicles: Uruguay has made electric cars as affordable as possible in terms of taxes. From January 1, 2022, the internal IMESI tax on electric vehicles (previously it was ~5–30%) was completely abolished. autoblog.com.uy . Moreover, electric cars are exempt from import duty (TGA = 0%) gub.uy . Thus, when importing an electric car, a dealer does not pay a 23% tariff. In addition, many departments reduce the annual patente tax by half for electric cars, and insurance companies and the state bank offer preferential rates for them. As a result, when buying an electric car, the owner saves about 40-50% of the taxes they would pay for a similar gasoline car. Thanks to this, Chinese brands (BYD, Chery, etc.) were able to bring electric models to the Uruguayan market at attractive prices of ~20-30 thousand USD, which caused a surge in demand.

Subsidies and Subite programmes. The Ministry of Industry and Energy (MIEM) has launched several programmes to support electric-vehicle purchases under the common ‘Subite’ brand (‘get on board’), with different strands:

• Subite Pasajeros - subsidies for taxi and ride-hailing drivers (Uber, etc.) switching to electric vehicles. Between 2023 and 2024, 100 drivers received grants of $5,000 to buy an electric vehicle to replace an old taxi. In total, ~$500,000 was allocated for this project. eldiarioweb.com . The condition is that an old internal-combustion vehicle be scrapped or removed from service.
• Subite Buses is a co-financing programme for the purchase of electric buses by urban transport operators. The state compensates for part of an electric bus’s cost or provides interest-free loans. As a result, dozens of electric buses are already operating in several cities (Montevideo, Salto) talleractual.com , reducing emissions and noise.
• Subite Cargo – incentives for companies to purchase electric trucks and vans. The government reimburses $3,000 for each electric van (category N) purchased for commercial use, up to 10 vehicles per company. elobservador.com.uy elobservador.com.uy . Part of the cost of installing chargers at business premises is also reimbursed. The program is designed for 100 vehicles; by September 2025, about 30 companies had already taken advantage of it. Examples show that switching to electric vehicles has enabled businesses to cut fuel costs by a factor of 4–5.
• Subite (Motos y Triciclos), announced in 2022, is the program’s first initiative aimed at individuals. It provides a 10% refund on the purchase of an electric scooter or electric tricycle (up to $250 for a motorcycle and $450 for a tricycle) gub.uy . The first 1,000 electric scooters and 100 cargo tricycles purchased under the program are eligible for this cashback. New owners also receive a one-time discount of approximately UYU 2,022 on their electricity bill from UTE gub.uy and free BSE insurance for one year gub.uy . This measure aims to make electric transport affordable for the public (an electric scooter costs approximately $2,000–$3,000).

In addition to financial incentives, Uruguay is rapidly developing charging infrastructure. Uruguay’s state electricity company, UTE, is actively building a network of charging stations. In 2023–2024 alone, 300 new charging points were installed, bringing the total to 460 stations by mid-2025. talleractual.com . Of these, 70 are fast DC chargers that can charge a car in 30–60 minutes. Almost all of the country’s main highways now have charging points every 50–100 km, and public chargers are appearing in urban parking lots and at gas stations. This addresses one of the main obstacles to widespread EV adoption—“range anxiety,” the fear of running out of charge far from a charging point.

Results of environmental initiatives

Thanks to these measures, the share of electric vehicles in Uruguay’s market has become the highest in Latin America. In 2023, electric vehicles accounted for approximately 3.2% of sales (1,841 units) uruguayxxi.gub.uy , while in 2024, their share surged to 9% (5,856 electric vehicles sold). In the first months of 2025, electric vehicles accounted for 14.5% of the new-car market, rising to 16.2% by July 2025. By the end of 2025, there will be about 20,000 electric vehicles on the country’s roads. By this metric (approximately 17 electric vehicles per 10,000 inhabitants), Uruguay became the leader in South America talleractual.com , ahead of Chile and Colombia.

The government has set a target of 72,500 electric vehicles by 2030 and continues its incentive policies talleractual.com . At the same time, other environmental measures are being considered: for example, the possibility of completely abolishing VAT on electric cars (currently 22%), which would make them even cheaper. mobilityportal.lat . In addition, preferential lending programs for hybrid cars and the development of hydrogen transport are discussed (Uruguay is implementing pilot projects on hydrogen buses).

In addition to the “green” agenda, the authorities support the vehicle fleet through social programs. In particular, state programs exist for certain categories of citizens: for example, people with disabilities can import a car duty-free if its controls are adapted, while veterans and pensioners receive discounts on the annual “patente” fee. The state bank BROU also periodically offers preferential-rate car loans so that middle-income families can buy a new, fuel-efficient car. All these initiatives aim to renew the vehicles on Uruguay’s roads, making them safer, more economical, and more environmentally friendly without leaving socially vulnerable groups without support.

Conclusion:

Uruguay’s automotive market has distinctive characteristics. On the one hand, it is marked by high prices and taxes, which make car ownership expensive; on the other, it has stable demand and is growing gradually. The lack of local production is offset by a well-designed import policy: the country is integrated into the regional MERCOSUR market and is increasingly open to new global brands, including electric-vehicle startups. Strict restrictions on used-car imports have resulted in a limited supply of used vehicles and encourage people to buy new cars, although many continue to drive older vehicles for financial reasons.

The state plays a major role in this market, balancing fiscal, social, and environmental interests. High taxes on fuel and cars support the budget, but the proceeds are also directed towards infrastructure and incentives for green transport. As a result, Uruguay has become a pioneer of electric mobility in the region, creating conditions for a mass transition to electric vehicles through preferential taxation, subsidies, and a charging network. These efforts are already noticeably changing the country’s vehicle fleet: modern Chinese-made electric hatchbacks are increasingly seen alongside familiar gasoline-powered models.

For consumers in Uruguay, buying a car is a serious step that requires considering many factors, from the high one-time tax burden at purchase to the regular costs of expensive gasoline, insurance, and vehicle inspections. Nevertheless, owning a private vehicle remains popular, especially outside major cities, where public transport is poorly developed. When deciding to buy a car, Uruguayans need to be well informed about all legal and financial aspects—which is why local consultants emphasize the importance of an “intelligent approach” to choosing a car in “Latin America’s most expensive country.”

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